Great Pic. Barbell TGU's are no joke.

Also, off topic, but is this link: http://www.xfitnet.com/
Legit? I just get asked to "like it" on facebook...
lots of comments about CrossFit...just curious before I go supporting something without the CF name in it.

Very curious to hear what folks reply to the affiliate scenario posted above...

Small point about Lisbeth's question-
- In my mind the worth of a thriving affiliate will to an unavoidable extent be determined by the owner/operators of that affiliate. Meaning, if you take over an affiliate and change one thing about the way it is owned or operated you inherently change its value. So much of what we do, the service we provide and our public perception is driven by management. Just a few quick examples- is the owner present or no? How involved are they with the clients? Do they know them personally? etc etc. The answers to all of these types of questions explicitly impacts the performance and reputation of the affiliate and thus its value.

So, I feel this question may be unanswerable. The instant you change the structure or "branding" at all you change the value of the thing you're purchasing. The most immediate example I can think of is my father's own company. He owns/runs a medium-sized import/export business in Asia. The value of his company is far more than just the quantifiable assets such as stock, cash holdings etc b/c of the network and business-savvy the human element provides. If my father sold his company I expect many of his current clients would take their business elsewhere simply b/c the relationships they've come to know and trust would no longer exist. The true value of the company would change and I can't imagine how'd you actually quantify such a thing.

Interesting question.

This is a fantastic question, especially since I am signing the paperwork tomorrow to take over an affiliate. I don't have any intention of "rebranding" it though because it is exactly the kind of community that I want to create already. I just hope to continue to grow it in the fashion that it has already taken on.

Figuring out the worth was pretty tough. We just took what the business was worth in equipment and clients, then figured in some sweat equity and came to a nice round number. We had a tough time getting a business valuation from a CPA because the business was so young (only 7 months old). Overall though the process has been incredibly smooth and I can't wait to let the members in on this great news.

Good to hear from someone who actually went through this...are you willing to share why the affiliate, so young, was being "sold"?

The owner took a year off from her social work program to start up the affiliate because she knew there was a need. She's starting her program back this winter and wanted to pass it on to me.

Thanks Chad~

That's easy. All affiliates are worth precisely 10 million dollars.

... precisely.

If I sold my Affiliate I'd look at a depreciated asset value plus an earnings multiple. 4-8x annual earning depending on what they are. The higher the earnings the higher the multiple. If I was selling I'd also look for some goodwill, if I was buying I wouldn't want to pay for it.

4-8x annual earning? Wow, wanna buy mine? :) Would you still pay a higher multiple if the current owner were leaving?

No offense Damon, but 4-8x annual earnings is extremely high for a small business. Most small business owners are lucky to get 3-4x.

Sean, most small business don't get as much because most small businesses sell because they aren't thriving or don't get as much because they're administrative side needs work or isn't streamlined for a buyer..

Things that make your multiple go higher in all business.
1. Positive monthly cash flow.
2. Squared away book keeping
3. Atmospherics (Happy clients & employees).
4. Consistent Growth over the course of the businesses life (This is a big ticket item on the sale price), with matching books.
5. Growth Ceiling.. Is there visible room to grow (buyers perception).
6. Lastly.. Is the property owned or leased.. Not a huge factor but a factor the buyer needs to look into.
7. For a CF box, I would also factor in if the owner works hours in the gym and how many? As an owner, I'm sure you all see this to. It is that clients gravitate not just toward the programming and the other clients, but a lot in there Coaches personality.. The more hours the owner works the more trouble or more work that can and will be put on the new buyer if the personalities differ too greatly..

Positive monthly cash flow over the duration of your business guarantees 2-3X annual.. With each check in the box after that, it will surely go up. In the end, how much input does the new owner have to put in. The more turn key the more its worth.